Our colleague Harold Pollack has a thoughtful OP-ED in today’s edition. His piece is deeply pessimistic about recent trends in quality of life for African-Americans in Chicago.
The paper also reports a quick debate on whether environmental regulation is a jobs killer. For those members of the RBC community who are interested in “the details”, here is a .pdf of Michael Greenstone’s 2002 JPE paper that documents the economic costs of environmental regulation. Here is a copy of the paper he mentions measuring the health benefits of that same regulation.
The Rich and Broder piece ignores one important point. The Clean Air Act is not uniformly enforced across the United States. Counties are assigned to “Non-Attainment” status and “Attainment” status. When new regulations are imposed on the dirty urban counties, these “Non-Attainment” counties do lose some jobs (as documented by Greenstone) but these jobs do not all walk to China. Instead, they “leak” to other less regulated U.S areas (the Attainment status counties). So, from a macro perspective — the job loss estimates based on micro regression methods overstate the economy wide impact. Intuitively, if ozone regulation becomes more severe, Los Angeles may lose some jobs but they will be displaced to somewhere in Mississippi.
The bigger issue that the Rich and Broder piece raises is what we are willing to sacrifice to create new jobs. U.S businesses would create “more jobs” if there was less labor regulation, environmental regulation and fewer benefits regulations tied to hiring. In this age of experimentation, I have argued that we should run a randomized experiment to see if firms will hire more workers as they face less redtape and can fire at will. Given that job growth now is crucial, let’s experiment with different strategies to see what is effective at “growing private sector jobs”. Reliance on a government “Big Push” is unlikely to be a politically feasible strategy now.